Bitcoin Faces Pushback From Czech Central Bank

Czech National Bank board member Jan Kubicek has expressed reservations about incorporating bitcoin into the central bank's reserves, citing its legal uncertainties and price fluctuations

A member of the Czech National Bank board has raised doubts on bitcoin as a reserve asset, citing legal uncertainty and volatility risks, even as it explores new asset classes.

Jan Kubicek, a board member at the central bank, expressed reservations about including bitcoin in the institution’s reserves due to its ambiguous legal status and significant price fluctuations, which could pose challenges for the bank’s accounting and auditing procedures, Kubicek said on Tuesday.

“My position is rather skeptical about bitcoin,” he stated.

The central bank is set to complete a comprehensive evaluation of alternative asset classes by October.

Kubicek's comments follow Governor Ales Michl's proposal to include BTC in the central bank’s asset review.

During an interview with local news outlet Seznam Zpravy, Kubicek explained that the central bank will be assessing different classes of assets, with bitcoin being just one of them.

Kubicek noted that the cryptocurrency's unpredictable value shifts remain a key concern. He added that he is not yet certain how bitcoin's volatility in the coming years will compare to the patterns observed over the past decade.

“I suspect that, if more institutional investors accept bitcoin as an investment asset, it will start to behave differently from what we have seen so far,” he said.

In addition to BTC, the central bank will also be examining the possibility of investing in international corporate bonds, select equity indices—particularly those focused on technology—and property investment funds.

The central bank will not be investing in U.S. Treasury bonds, which are already included in the institution’s portfolio.

Kubicek's skepticism towards bitcoin is shared by other policymakers in the country.

Earlier this year, Czech National Bank Vice Governor Eva Zamrazilova dismissed BTC as an appropriate reserve asset.

“Bitcoin is not a suitable asset for reserves,” Zamrazilova said in April.

European Central Bank (ECB) President Christine Lagarde has also rejected the idea of the central bank investing in bitcoin.

“Europe's central banks are not the place for it,” Lagarde said.

Governor Michl has acknowledged concerns regarding cryptocurrency investments but pushed for further research into bitcoin's potential as a reserve asset. He has suggested creating a test portfolio for the cryptocurrency while differentiating it from other digital assets.

“Bitcoin, however, is a different story. It should not be lumped together with other crypto assets. We central bankers should study it and explore the technology it is built on,” Michl stated.

The Bank Board has authorized an analysis of new asset classes, including bitcoin, and investment plans will be submitted to the board for approval.

The central bank has expanded its reserve diversification efforts, now holding 142.8 billion euros ($155.75 billion), equal to around 45% of the country's gross domestic product. The bank has incrementally increased its gold reserves and allocated more funds to equity investments.

In the United States, President Donald Trump has signed an executive order to establish a Strategic Bitcoin Reserve, positioning bitcoin as a digital alternative to gold.

Moreover, various U.S. states are assessing legislation to introduce their own BTC reserves. State senators in Montana and Wyoming have put forth bills that would permit state-level investments in bitcoin.